The Ultimate Guide to Business Credit Cards
Whether you’re a working professional with a side hustle, a new, full-time business owner, or an entrepreneur who’s been operating for some time, you might find it worthwhile to invest in a business credit card.
In the same way that you use a personal credit card in your everyday life, business credit cards can be used for a variety of purposes—from paying for ordinary business expenses to making larger investments in your business. Plus, there are a number of benefits to using a business credit card—perhaps most notably, a business credit card allows you to separate your business and personal finances—protecting you from organizational, bookkeeping, and even legal issues down the line.
There are a variety of small business credit cards available out there to choose from—and the credit card that’s right for you will largely depend on your specific preferences and needs.
In this guide, we’ll compare the best business credit cards on the market, as well as discuss everything you need to know to understand this financial product and find a suitable credit card for your business.
Comparing the Best Business Credit Cards
With the vast number of business credit cards on the market, it can be helpful to narrow down your options by looking at different categories, as we’ve done below.
Small Business Credit Cards by Issuer
Alternatively, another method to compare the best business credit cards is to look at different cards based on the issuer. You may prefer to get your business credit card from the same financial institution that houses your business bank account, or the one that issued your personal credit card. In fact, certain issuers offer benefits for using more than one of their business financial products.
With this in mind, you can explore the top business credit cards based on their issuer by consulting our guides here:
- American Express business credit cards
- Chase business credit cards
- Capital One business credit cards
- Bank of America business credit cards
- Citibank business credit cards
- Wells Fargo business credit cards
- BB&T business credit cards
- US Bank business credit cards
- Visa business credit cards
- TD Bank business credit cards
- Barclays business credit cards
- Amazon business credit cards
Understanding Business Credit Cards
As you can see, the concept of a business credit card is simple: It’s a credit card, designed specifically for business owners.
Like personal credit cards, credit cards for small businesses allow cardholders to cover expenses, build credit, and earn rewards.
However, there are important distinctions between business vs. personal credit cards.
When it comes down to it, a business credit card should be used exclusively for business expenses. Using a business credit card for personal expenses can make your bookkeeping more complex—plus, put you at risk for tax and legal issues.
Additionally, the rewards you receive with a business credit card will differ from those you earn with a personal credit card. Although both of these types of cards can offer cash back and point-based rewards, business credit card rewards are earned based on spending categories that are tailored to small businesses—like office supplies, gas, internet and cable services, advertising, etc.
Moreover, many small business credit cards will allow you to build business credit history, in addition to or instead of affecting your personal credit, although this is not always the case.
All in all, however, the mechanics of a business credit card are almost identical to a consumer credit card. Like a consumer credit card, you make purchases on a business credit card and repay them later. You typically have a spending limit on the card (unless it’s a business charge card) and this limit can be raised if you show a history of responsible spending and on-time payments.
This being said, although you may only be required to pay your minimum balance each month, you’ll accrue interest on the remaining balance, with the rate you’re charged, your APR, varying based on the specific card, the market rate, and your creditworthiness.
Types of Business Credit Cards
With all of this information in mind, it’s also important to understand the different types of business credit cards. In this case, we’re not referring to Visa vs. Mastercard or Chase vs. Capital One as “types” of cards, but instead, revolving business credit cards, business charge cards, and secured business credit cards:
Should You Get a Business Credit Card?
So, now that we’ve reviewed how business credit cards typically work, the different types of cards, as well as explored some of the top options on the market, you may be trying to decide: Is a business credit card right for me?
In short, all business owners can benefit from using a business credit card, provided they spend wisely and make on-time payments. Overall, some of the most notable benefits of using a business credit card boil down to:
- Simplify your bookkeeping: Having a business credit card will allow you to separate your personal and business expenses—making your bookkeeping and taxes much simpler.
- Provide a cash flow cushion: A small business credit card gives you the ability to pay expenses and make purchases—stretching your dollars without dipping into your cash flow.
- Establish and improve Your business credit score: Responsibly using a business credit card is one of the easiest ways to build your business credit score. If you pay your bills on time, keep your credit card balance manageable, and stay within your credit limit, you’ll quickly build or improve credit for your business.
- Take advantage of rewards and perks: Most small business credit cards offer higher cash back rewards than consumer cards do, alongside bonuses on typical business buys like internet and cable services, office supplies, gas, travel, and restaurant bills.
On the other hand, of course, there are certain risks associated with business credit cards. Generally, business owners find that the benefits outweigh the risks, especially if you practice responsible spending.
This being said, however, it’s nevertheless worth keeping the following in mind:
- Personal finances and credit score can be at risk: When you take out a business credit card, you’ll likely have to sign a personal guarantee. This guarantee makes you personally responsible for the business debts you put on the card. Therefore, if you are unable to pay off your business credit card debt, your personal credit will suffer as well.
- Consumer protections don’t apply to business credit cards: The federal Credit CARD act of 2009 applies to consumer credit cards, alerting users when interest rates change on their cards. This protection does not apply to credit cards for small businesses. Therefore, if you tend to carry credit card balances and accrue interest on those balances, you might suffer from the lack of notification that your interest rates are changing.
Annual fees might be higher: Although this isn’t always the case, business credit cards often have higher annual fees than consumer cards—especially business charge cards. You’ll want to be sure you understand any and all fees you’ll face before signing up for a business credit card.
How to Choose the Right Credit Card for Your Business
Ultimately, only you can decide which business credit card is right for your needs.
This being said, to sort through the options out there, you’ll want to consider a variety of qualifications—including type of card, fees, interest rates, rewards programs, card issuer, and more. In addition to these traditional factors, you’ll also want to think about your specific business and what your unique needs might be—and try to match those up with the right business credit card.
For example, you might think about the search process this way:
- Do you travel frequently for work? You might want to focus on cards with airfare and hotel perks.
- Do you need to fund startup costs? You’ll likely want to look for business credit cards with high credit limits and low promotional APR.
- Do you carry out business internationally? You’ll want to pay attention to foreign transaction fees and other hidden charges for purchases outside the country.
At the end of the day, the type of business credit card you choose should be based on how you intend to use it, what terms and fees you’re comfortable with, how your small business works, and of course, what card you can qualify for.